How can I fix the non-stitched seam that is present after applying mirror modifier?
The normals issue can easily be solved by selecting all the vertices in edit mode and pressing Ctrl+N (You may need to select the Inside option as well, depending on your mesh). You could also add a solidify modifier if you want to have the normals correct on the inside and outside.



The edge loops can be merged together by selecting both edgeloops, and scaling to zero along the Y axis. All you then need to do is to remove doubles.